"Should any volcanic ash make its way into in Bali airspace tomorrow [Wednesday], however, this could result in flight disruptions," Jetstar said.

Virgin Australia said it was continuing to monitor the situation closely.

No other Australian airline has signalled any change to flight schedules as a result of Mount Agung.

Locals and tourists are being urged to remain calm and not to panic.

The Department of Foreign Affairs and Trade is urging Australians in Bali to stay outside a 7.5-kilometre exclusion zone around the volcano and to follow the instructions of local authorities.

Tourists who bought insurance for their trips to Bali prior to last night's eruption are expected to still be covered in the event of any delays or flight cancellations should the situation worsen.

But travel insurance companies are expected on Wednesday to announce no insurance for Bali taken out after the eruption will cover any Mount Agung-related activities.

The volcano sent smoke as high as 800 metres above its summit, as it stirred to life again after more than 140,000 people fled homes around the crater last month. Picture: AFP/Indonesia's Disaster Mitigation Agency

The head of the volcano monitoring post at Mt Agung, I Dewa Made Mertayasa, said the eruption was a "phreatic explosion" and there was no reason yet to extend the evacuation zone around the volcano that is already at between 6 and 7.5 kilometres from its crater. More than 140,000 people fled their homes in that exclusion zone in September as fears of an eruption grew.

"Phreatic means that the water in the crater surface collected because of heavy rain recently combined with ascending magma," Mr Mertasaya said, according to the ABC.

"The dangers are for [the people] living within a 6 kilometre to 7.5 kilometre radius from the crater. That evacuation zone should remain clear because the ash clouds are heading in that direction."

Sutopo Purwo Nugroho from Indonesia's National Disaster Mitigation Agency said the phreatic eruption was caused by magma heating water, rather than a generally more dangerous eruption of magma itself, AP reported.

New Zealand volcanologist Dr Janine Krippner said the eruption was "At this point this is very, very small".

"Right now this is not a serious eruption but of course this can change," Dr Krippner tweeted.

"Time to make sure you are prepared and keep an eye on official Agung information."